China: May 17, 2012-
May 31, 2012
By Adebowale Asaya, MBA candidate at the Howard University School of Business,
Class of 2013
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If
I could sum up my trip to China in May of 2012 with a few words, those words
would be; amazing, cultural, celebritism, & shopping! The trip was
motivated by China’s recent economic and social reforms. We visited Beijing,
Shanghai, and Guangzhou….all tier 1 cities. As business students, personal
observation on the people of China, and business practices in China is
essential. I planned to develop an understanding of how to generate business
and do business in Asia. The trip
started on May 17(a day after my birthday!), from Dulles airport. The first leg
of our trip was from Washington to NJ, and then from NJ to Beijing. Our trip to
China began in Beijing, which presented a wonderful experience and more importantly
a rich, cultural journey. Beijing is the capital of the People’s Republic of
China so there were a lot of other tourists in the city with us. One of the
first things we did upon arriving in Beijing was enjoying a meal in one of
Beijing’s finest restaurants close to our hotel. We ate family style, which was
new to many of us. The Chinese
culture measures very high on the “collectivism” scale along with Japan and Korea
compared to most western cultures. This
means that the Chinese, in general, is a collective society that strives for
harmony and group belonging. Eating with a
lazy Susan and sharing entrees was something that was very new to us. However,
as we progressed meal after meal, we got a lot better with chopstick handling,
and interacting with each other using the lazy Susan. I was particularly
impressed with the Beijing duck, some
sweet and sour sauces, sizzling fish pans and others.
While in Beijing, we also saw the Forbidden City,
Summer Palace and the Great Wall of China. In visiting those sites, one
thing that we had to get used to was the staring. So many people were looking
at us. After a while we never noticed it
anymore, but some got bothered by it. Lots of people even came up to me and asked
if they can have a picture with me. In America, and more specifically in
Washington, DC, the cultural landscape is more diverse. The amount of different
cultures and people you meet in one day out in the city is almost countless and
endless. In Beijing, commoners were shocked and very excited to us.
Another interesting piece of my
experience in China was the shopping. One thing about shopping in China is that
many things are much cheaper than in the US. This is due to manufacturers in China and
their ability to compromise intellectual property. Of course the quality of
items in the marketplace were very questionable, prices were so unbelievably
low that we almost were left with no choice but to consume! China is currently
taking advantage of their huge population and low labor cost structure to
intentionally keep the value of their Yuan low. In turn, this almost forces
other nations to continue to buy from them with no other options because of
such low cost. China’s economy also benefits from foreign OEMs and
multinational companies who NEED China’s consumer because there are 1.3 BILLION
of them. Many US Manufacturers are experiences their highest sales from China
now.
Business
in China
While in Beijing, we
visited both Lenovo Corp and HiSoft Technology International Limited. Lenovo
hails as one of the world’s largest makers of personal computers. We took a
tour of their headquarters, and heard a bit of their strategy to surpass
Hewlett-Packard, who currently is #1 in world market share. The tour of their
facility was very enlightening, and there was a certain level of humility that
lingered in the headquarters of both Lenovo & HiSoft. This was because of
the relationship – based culture that exists in China. Chinese
and Westerners often approach a deal from opposite ends.
Westerners
normally build transactions, and if they are successful, a relationship will
ensue. However, the Chinese believe that prospective business partners should
build a relationship, and if successful, commercial transactions will follow.
Virtually all successful transactions in China result from careful cultivation
of the Chinese partner by the foreign one, until a relationship of trust
evolves. Business clauses might form a useful agenda, but obligations came from
relationships, not paper. Today, a signed piece of paper is a symbol of
progress, but nothing more. The Chinese may sign a contract to humor their
guests. The idea of a friendship leading to business is attractive. The logical
development of close relationships is the Chinese concept of guanxi, pronounced
“guan xi”. The kernel of guanxi is doing business through value-laden
relationships.
Its
very difficult to BRIEFLY describe what are the must-knows in doing business in
China. But If I had to summarize here goes…..
Business and culture
l Western
business visitors are often deadline-driven and unwilling to slow down to the
Chinese pace when discussing business.
l Negotiations
can seem to drag on when the Chinese side is consulting internally or has other
reasons for delay.
l Western
thought is dominated by linear logic, whereas Chinese thinking is influenced by
early philosophers who saw a paradoxical balance of opposites in all things.
l Where
Westerners tend to look for clear alternatives (option A instead of option B),
Easterners may examine ways to combine both option A and option B.
l Westerners
normally build transactions, and if they are successful, a relationship will
ensue.
l However,
the Chinese believe that prospective business partners should build a
relationship, and if successful, commercial transactions will follow.
l This
difference underlies many misunderstandings arising from business negotiations.
l Virtually
all successful transactions in China result from careful cultivation of the
Chinese partner by the foreign one, until a relationship of trust evolves.
l The
logical development of close relationships is the Chinese concept of guanxi,
pronounced “guan xi”. The kernel of guanxi is doing business through
value-laden relationships.
l The
idea of a friendship leading to business is attractive.
l Chinese
and Westerners often approach a deal from opposite ends.
l Traditionally,
commercial law scarcely existed in China and indicated bad faith—the early
appearance of a draft legal contract being inappropriate irrelevant since it
carried no sense of commitment.
l Business
clauses might form a useful agenda, but obligations came from relationships,
not paper. Today, a signed piece of paper is a symbol of progress, but nothing
more. The Chinese may sign a contract to humor their guests.
l The
challenge of learning to speak fluent Chinese, complexities of the Chinese way
of doing business, and a strong sense of national pride mean a foreigner will
very rarely be accepted on equal terms.
l Having
“face” means having a high status in the eyes of one's peers and is a mark of
personal dignity.
l “Face”
is an essential component of the Chinese national psyche. Causing someone to
lose face could ruin business prospects or even invite recrimination. Examples include: Insulting an individual or
criticizing them in front of others; Making fun of them in a good-natured way;
and treating someone as a subordinate when their status is actually higher.
